E2 Law Blog : Environmental Lawyers & Attorneys : Greenberg Traurig Law Firm : Climate Change, Energy Legislation

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From Jeffrey Collier of GT West Palm Beach:

On October 21st, the U.S. Forest Service and environmental advocates successfully defended the Clinton administration's Roadless Area Conservation Rule ("Roadless Rule"), winning a decision by the U.S. Court of Appeals for the 10th Circuit requiring a district court to vacate its nationwide injunction against the rule.  See Wyoming v. U.S. Dep't of Agriculture (USDA), No. 09-8075 (10th Cir. Oct. 21, 2011).

The state of Wyoming, with support from the Colorado Mining Association, had won a decision in the U.S. District Court for the District of Wyoming on claims that the Roadless Rule violated the Wilderness Act and the National Environmental Policy Act ("NEPA") by creating de facto wilderness areas and by doing so without following NEPA procedural requirements.  The Roadless Rule eliminated prospects for almost any road construction on about 58.5 million acres of federal land.

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In this month's Pennsylvania Law Weekly / Legal Intelligencer column, Sabrina Mizrachi and I consider the recent Pennsylvania Environmental Hearing Board (EHB) decision, Consol Pennsylvania Co. v. Department of Environmental Protection, EHB Docket No. 2010-030-R (Pa. Env. Hrg. Bd. Aug 26, 2011).  We use Chief Judge Thomas W. Renwand's opinion as a chance to review the sometimes confusing jurisdictional and procedural principles of the EHB.

To read the article, click here.

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From K.B. Battaglini of GT Houston:

The Texas Supreme Court, in resolving a conflict among Texas Courts of Appeal over whether state-issued permits immunize permit holders from civil liability, has held in FPL Farming Ltd. v. Environmental Processing Systems LC, No. 09-1010 (Tex. Sup. Ct. Aug. 26, 2011), that wastewater injection well permits issued by the Texas Commission on Environmental Quality (TCEQ) do not shield holders from civil liability.

Environmental Processing Systems (EPS) obtained a permit to drill and operate a wastewater injection well.  FPL Farming sued EPS for trespass and negligence and seeking a permanent injunction, alleging that a waste plume was projected to migrate into the deep subsurface of the formation underlying FPL's property.  A jury failed to find that a trespass had occurred, and a trial judge entered a take-nothing judgment against FPL.  A Texas Court of Appeals considered the threshold question of whether FPL may pursue a trespass claim when TCEQ approved a permit allowing EPS to inject wastewater and the information before the TCEQ showed that EPS's waste plume was projected to migrate into the deep subsurface of the formation underlying FPL's property.  The Court of Appeals concluded that EPS was shielded from civil tort liability, reasoning that no trespass occurs when fluids that were injected at deep levels are then alleged to have later migrated at those deep levels into the deep subsurface of nearby tracts.  The Texas Supreme Court disagreed, finding the reasoning of the Court of Appeals to be inconsistent with the common law rule of the legal effect of an agency's permitting process, because a permit is a "negative pronouncement that grants no affirmative rights to a permittee" and that the Texas Injection Well Act (the policy and purpose of which it to maintain the quality of fresh water in the state) does not preempt civil actions.  However, the Texas Supreme Court cautioned that "we do not decide today whether subsurface wastewater migration can constitute a trespass or whether it did so in this case."

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In my monthly column in The Legal Intelligencer/Pennsylvania Law Weekly, I examine two recent Pennsylvania Environmental Hearing Board appeals which address aggregation of air emission sources under the Clean Air Act and the Pennsylvania Air Pollution Control Act.  The cases, Group Against Smog and Pollution v. Department of Environmental Protection, EHB Docket No. 2011-065-R, and Clean Air Council v. Department of Environmental Protection, EHB Docket No. 2011-072-R, consider whether, and how, air emissions from natural gas wells, gathering systems and compressor stations should be aggregated.

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From Marvin Kirsner of GT Palm Beach County:

The 4th Circuit held this week that a federal district court has jurisdiction over a case challenging a local carbon tax, even though the Tax Injunction Act generally deprives federal courts of jurisdiction in state or local tax controversies. This case should be very helpful to companies challenging a local tax that is in the nature of a punitive regulatory fee, especially where the tax is structured to apply to a single company.

This case, GenOn Midatlantic, L.L.C. v. Montgomery County, No. 10-1882 (5th Cir. June 20, 2011), involves a Montgomery County, Maryland “tax” on carbon emissions. The county imposed a tax at the rate of $5 per ton of carbon dioxide emitted, but the tax only applies to companies that emit more than 1 million tons of carbon annually. If the 1 million ton annual threshold is reached, then the tax applies to the first ton emitted.

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From Hamilton Hackney of GT Boston:

As revealed in a recent bankruptcy case, purchasers of contaminated property need to have a very clear understanding of their contractual remedies before proceeding with self-help. The case (In re Evans Industries, Inc., No. 10-30387 (5th Cir., June 21, 2011)), involved the sale of the debtor’s assets as a part of a Chapter 11 bankruptcy plan. The debtor/seller (Evans) had operated a business that made, filled and distributed steel drums and containers at five facilities. The purchaser (Greif) paid $11,250,000 for the bulk of Evans’ assets, and had continued to operate the drum/container business at the five facilities. However, $1,657,500 of the purchase price was placed in a holdback escrow account to fund certain expenses arising under the asset purchase agreement. 

Greif subsequently incurred $650,000 removing and properly disposing of hundreds of barrels containing hazardous waste at several of Evans’ former facilities. Greif then submitted a claim for reimbursement for its expenses from the holdback account. The bankruptcy court, and the federal district court on appeal, both ruled that Greif had no contractual right to seek reimbursement from the holdback account. Greif then appealed to the Fifth Circuit, which affirmed the lower court rulings.

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From Hamilton Hackney of GT Boston:

First, the Bad News

The Supreme Court has rejected a long-running challenge to one of the most-feared enforcement tools for compelling cleanups at federal Superfund sites: Section 106 Unilateral Administrative Orders (UAOs). The Court refused to review a ruling from the D.C. Circuit Court of Appeals that upheld USEPA’s use of UAOs in the face of claims by General Electric that UAOs were unconstitutional. See General Electric Co. v. United States, No. 10-871 (June 6, 2011), cert. denied.

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Last week, U.S. District Judge Alan S. Gold announced his intention to strip the Florida Dept. of Environmental Protection (FDEP) of its authority to issue permits under the Clean Water Act and return that power to the U.S. EPA.  See Miccosukee Tribe v. USA et al., No. 1:04-cv-21448 (S.D. Fl. Apr. 26, 2011).  In response, the FDEP stated that the judge is "essentially federalizing Florida's Everglades restoration permitting process."  The opinion clarifed his April 2010 opinion, in which he said the U.S. EPA, FDEP and the South Florida Water Management District had failed to enforce the Clean Water Act.

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From Hamilton Hackney of GT Boston:

As noted in a previous post, as well as in August 2009 and October 2010 GT Alerts, it is no secret that the Federal Trade Commission (FTC) has stepped up its regulatory efforts to address deceptive environmental marketing claims, including initiating enforcement cases and proposing revisions to its “Guides for the Use of Environmental Marketing Claims” (the so-called Green Guides). However, manufacturers of consumer products should not forget that state regulators often possess independent authority to take action against alleged greenwashing.

A recent example is a settlement announced by the Massachusetts Attorney General’s Office in a case brought against EarthTronics, Inc., a manufacturer of compact fluorescent light bulbs.  See Massachusetts v. EarthTronics, Inc., No. 11-1448E, (Mass. Super. Ct.). CFLs contain mercury, which in Massachusetts triggers an obligation to comply with the state’s Mercury Management Act (MMA). Passed in 2006, this statute bans the use of mercury in certain consumer products and imposes various notification, labeling, end-of-life, and consumer education requirements for products that are not subject to the ban. In 2009, the Massachusetts Department of Environmental Protection (MassDEP) issued a notice of enforcement to EarthTronics for failing to comply with the MMA, and EarthTronics paid a $6,000 penalty.

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From Lisa Halko, GT Sacramento.

On April 14, 2010, the California Supreme Court denied a petition to review the Fourth Appellate District’s decision in American Meat Institute v Leeman holding the Federal Meat Inspection Act (FMIA) preempts California’s Proposition 65.  This decision will provide much needed regulatory certainty, and possibly curtail Proposition 65 abuses.

The AMI case arose because a well-known Prop 65 plaintiff, Whitney Leeman, had given notice of her intent to sue meat packagers for failure to warn consumers that meat supposedly contains harmful amounts of carcinogens and/or reproductive toxins.   Leeman claimed that packaged meat contains dioxins and PCB’s, which are listed Proposition 65 substances, and should bear labels stating: “WARNING: This product contains chemicals known to the State of California to cause cancer” or “WARNING: This product contains chemicals known to the State of California to cause birth defects or other reproductive harm.”  

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The U.S. Supreme Court has rejected a cert petition in the environmental citizen suit case of Pollack v. United States, 577 F.3d 736 (7th Cir. 2009).  The U.S. Seventh Circuit Court of Appeal held the plaintiff lacked standing to sue for remediation of a government gun range because he failed to demonstrate actual harm due to alleged contamination.  

Environmental advocacy groups historically have used citizen suits in lieu of legislation to advance policy goals. In many cases, these policy suits are based on very broad and non-specific allegations of harm, or even mere fears of potential harm. Pollack, however, holds that “Without some support for the assertion that he will be affected by the drift of polluted sediment or water, [plaintiff] has not shown that he has standing to pursue this lawsuit.”   

In many citizen suit cases, proof of standing is tantamount to a victory on the merits.  Pollack is significant because it places genuine scientific limits standing and, by extension, environmental citizen suits generally.  However, as the concurring opinion points out, “the Supreme Court's case law on this subject is both unclear in purpose and extraordinarily difficult to reconcile."  Consequently, Pollack's long term fate is unclear.  For now, at least, Pollack provides GHG emitters with a defense against the environmental groups' promised citizen suit litigation assault.

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As we noted here, law suits by environmental groups, often asserting claims based on the National Environmental Policy Act (NEPA), are a major barrier to clean energy generation and transmission.  Thus, the U.S. Supreme Court's grant of certiori in the case of Monsanto v. Geertson, notwithstanding the Obama Administration's objection, may prove to be good news for utilities and for clean energy generation and transmission companies. In Geertson, the Court is considering whether NEPA claims are exempt from the general rule that a likelihood of irreparable harm must be shown to obtain an injunction, whether a district court may enjoin a NEPA violation without conducting an evidentiary hearing, and whether the lower court erred by affirming an injunction based on an arguably remote possibility of harm. 

Historically, the rule has been a NEPA violation, even without evidence of substantive environmental harm, generally triggers an injunction blocking project development.  In Winter v. Natural Resources Defense Council, 129 S. Ct. 365 (2008), the Court began to limit this rule, holding plaintiffs seeking injunctive relief under NEPA must in fact demonstrate that they are likely to suffer irreparable harm in the absence of the requested injunction, just as they would be required to do in any other case in which an injunctive remedy is requested.  Should the Court extend Winter and rule for Monsanto on any of the three issues presented, then special treatment for NEPA cases will cease and environmentalists' and others' ability to employ NEPA for blocking projects may be functionally terminated.  Clean energy companies and consumers stand to benefit a great deal from such a ruling.  

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Do "environmental groups" aim to kill green energy?  A distressing pattern of litigious conduct suggests at least some "greens" oppose any energy project supporting the supposedly "unsustainable" Western lifestyle.   So, they sue.

Thanks to Robert Lamkin for the following post.

Judge Roger W. Titus of the U.S. District Court of Maryland has “reluctantly” enjoined construction of a West Virginia wind farm under the Endangered Species Act (ESA) to protect the Indiana bat. In Animal Welfare Institute v. Beech Ridge Energy LLC, Judge Titus ordered construction cease and operations suspended except when the bat hibernates. 

It is not clear whether this decision - the first from a federal court holding a wind power project violates ESA - means the Indiana bat is the green energy northern spotted owl, but it very well might.  The Judge assumed the developers could have obtained the FWS permit, but, as anyone with FWS experience can tell you, this is quite an assumption. The Indiana bat's habitat spans approximately twenty states in the mid-western and eastern U.S.   Thus, the Beech Ridge decision means wind power projects in a huge part of the US now may need to factor FWS permits into development financing and cost estimates, creating yet another barrier to green energy deployment.

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The key lesson of the recent summary judgment in Appleton Papers Inc. v. George A. Whiting Paper Co., No. 2:08-cv-16-WCG (E.D. Wis. Dec. 16, 2009), the $1 billion Fox River CERCLA contribution litigation, is that it takes really good lawyers to make "guilty" mean "guilty" under CERCLA.

Appleton involved a CERCLA contribution claim by carbonless copy paper makers against paper recyclers for a PCB cleanup of the Fox River in Wisconsin. The manufacturers knew recycling the production scrap and the carbonless copy paper carried risks, but sold it to the recyclers regardless knowing PCBs would end up in the river.  The court decided, on the recyclers’ motion for summary judgment, that the manufacturers were therefore too guilty for contribution.  The transcript of the hearing is very interesting reading.

The Appleton result, as anyone who has ever litigated a CERCLA contribution case can tell you, is tremendous and rare and a credit to David Mandelbaum and his team because allocation cases typically turn on volume and toxicity and not culpability.  Equally unusual is the relative speed with which Mandelbaum obtained the judgment. The recyclers were not all named until November 2008 but the culpability issue was ready for trial just 14 months later.

David and the other GT lawyers on the case will discuss the decision's practical implications and explore whether creative case management can make mega-cases tractable (for CLE credit, no less) in our Philadelphia office on February 4 from 8:00 to 10:15 a.m.  Contact Thelma Cranmer at 215-988-7800 or cranmert@gtlaw.com (put "Feb.4 CERCLA" in the subject line) for more information.

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The Southeastern Legal Foundation has filed a Petition for Reconsideration of the EPA's endangerment determination due to Climategate.  Although EPA likely will reject the Petition, it makes for interesting reading and provides a good foundation for future litigation.

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